On May 5th, Goldman Sachs (NYSE: GS) told investors to add U.S. financial and consumer stocks to their portfolios. However, Goldman Sachs is now conceding it was "clearly wrong" and is reversing course from its May 5th call of going long financials and consumer stocks.

"We boosted our consumer discretionary and financials weights in May on the belief the sectors would benefit from bank recapitalization and fiscal stimulus,'' analyst David J. Kostin wrote in a memo to clients today. "Our thesis was clearly wrong in hindsight.''

Bank, brokerage and insurance stocks, the third largest of 10 industries in the S&P 500, fell 19% from May 5 through June 20, more than any other group. Consumer discretionary slid 8.4%, while the S&P 500 slid 6.4% in the same period.

Goldman Sachs came out with a new note on June 17th that said financials will continue to have problems. Credit deterioration won't peak until next year as credit raising has become very difficult. Financial companies have already raised close to $304 billion to offset losses stemming from subprime loans.

Goldman also noted that consumer shares are vulnerable because of the difficulty to access to credit, ``sharply'' falling home prices and rising unemployment.